Microsoft Earnings Stumble, Sales Fall for First Time in 23 Years

On Thursday, Microsoft announced its financial results for the quarter ending March 31, 2009, earning $2.98 billion (down 32 percent year over year) on revenues of $13.6 billion (down 6 percent). The quarter represented the first time in the company's 23-year history as a public company that its revenue fell year over year, but the results were in line with expectations.

"While market conditions remained weak during the quarter, I was pleased with the organization's ability to offset revenue pressures with the swift implementation of cost-savings initiatives," said Microsoft CFO Chris Liddell. "We expect the weakness to continue through at least the next quarter."

Microsoft's earnings are tracking with the wider PC industry, which has been hit hard by the global recession. Windows division profit fell 19 percent to $2.5 billion, while revenues fell 16 percent to $3.4 billion. The division responsible for Office also saw some drops, with profit falling 8 percent to $2.9 billion on revenues of $4.5 billion (down 5 percent). But not all of Microsoft's businesses were down. Server sales jumped 7 percent year over year, and revenues were up 24 percent; Microsoft credits ongoing annuity revenue for the positive results.

Microsoft said it was on track to deliver Windows 7, the eagerly awaited successor to the lackluster Windows Vista, during its fiscal 2010 year, which runs from July 2009 to June 2010. That was enough to send Microsoft's stock up 4 percent in after-hours trading, despite the tepid quarterly results.